Thursday, September 11, 2008

In reading Tim Harford's article on why houses sell for more during the summer, I was struck by the similarity between his (well, Ngai and Tenreyro's) model of the housing market and my own model of the dating market. Here's Harford's description of seasonality in the housing market:

If Ngai and Tenreyro are right, then the housing market dynamic is something like this: buyers slightly prefer to buy houses in the summer, so house prices are slightly higher in the summer, so sellers prefer to put their houses on the market in the summer, and with more houses on the market, the market is thicker. That means that buyers are more likely to find the exact house they want, and so are willing to pay more; with prices higher, more sellers are attracted into the summer market, and fewer will contemplate selling in the winter. And so on. The self-reinforcing process can produce a large gap between summer and winter prices.

And here's my description of seasonality in the dating market:

[The cycle] starts with the Rite of Overdue Dumping, in which people exit relationships that they stayed in just for the holidays. And then there’s a cascade effect: the knowledge that more people are entering the singles pool encourages yet more people to exit their relationships, thus adding yet more people to the pool, etc. More dumpings take place than would be predicted by the post-holiday effect alone. ... In short, the cycle is driven by the pre-holiday and post-holiday effects, but the cycle is exaggerated – with higher peaks and deeper troughs – by the fact that people’s break-up decisions are interdependent. It makes most sense to break up and reenter the singles market when other people are doing the same.

Of course, Ngai and Tenreyo have actual data to support their claim, while I have nothing but anecdotal evidence. Anyone care to do the empirical work? Maybe Match.com would be the place to start.

9 comments:

I see a slight problem with your dating model. We women hate tough competition. If there are too many other single girls out man-hunting, it's a good excuse to stay in a less-than-ideal relationship a bit longer. And we all "know" that there's a shortage of good reliable men, so it doesn't matter how many new men enter are entering the singles pool...We're expecting most of them to be duds anyway.

Just occurred to me: There's a Sex and the City episode that supports my claim. Moral of the story: Don't break up a hot married couple. The hot guy reenters the singles pool...But so does the hot girl! It's not worth it.

@jennyWomen DO hate competition of any sort, whether married or not. On that note, you're 100% realistic. But I prefer to think there aren't THAT many duds! Come on! What ever happened to "There's someone for everyone?" *sigh* Perhaps I'm forever the romantic.

Think about the housing analogy. House buyers would rather not face competition from other buyers, and house sellers would rather not face competition from other sellers. But given the choice between (a) a small number of both buyers and sellers, and (b) a large number of both buyers and sellers, both groups generally prefer the latter. "Thick" markets are better, because they give everyone a better chance of finding a match that meets their idiosyncratic tastes.

Likewise, as a man, I would rather not face the competition of other men. And women would rather not face the competition of other women. But given a choice between (a) 10 free men and 10 free women, and (b) 100 free men and 100 free women, I prefer the latter. With 100 women out there, the odds are better that one of them will actually be a good match for my particular tastes. (And notice that I have held constant the ratio of men to women, so I'm no worse off in that respect.)

The alleged shortage of "good" men doesn't hurt the model, either. Even if you think only X percent of men are "good," you'd rather have a large population of available men out there, since then X percent will correspond to a larger number of potential prospects. And if women's tastes in men differ, then they won't always agree on what's "good." That makes thick markets desirable, because thick markets will do a better job of catering to individualized notions of male "goodness."